Slow growth feelings not much of a surprise

RSS

A poll of small to mid-sized company CEOs by consulting firm Vistage Internationalas 2012 drew to close found a majority shared a very unsurprising view of the economic situation ahead: namely, growth is going to be slow and that slowness is in many ways being generated almost completely by the political wrangling in Washington D.C.

Vistage said its CEO Confidence Index dropped to 87.0 in the 4th quarter of 2012, down from 89.0 in the 3rd quarter and lower than the 98.8 index posted in 4th quarter of 2011. The firm’s survey – conducted between December 10 and December 19 last year of some 1,601 chief executives across the U.S. – also found that CEOs anticipated overall economic conditions would remain subdued in the first half of 2013.

Economic and political uncertainty was voiced by nearly half of all CEOs when asked to identify the most significant business issue they are now facing, with at least one-in-four firms reported that concerns about the fiscal cliff and Washington's continued gridlock had already caused them to reduce their investments and number of new hires, Vistage’s polling discerned.

"The inability of Washington's political leaders to work together only fuels continued uncertainty,” noted Vistage CEO Rafael Pastor (at right). “Yet again, small business leaders are left to wonder if they'll receive any longer-term certainty from the President and the Congress about the key factors that help drive increased consumer spending, investment, productivity, and job growth."

Despite the avoidance of the fiscal cliff, CEOs polled by Vistage continue to foresee a slow pace of growth in 2013 because of the ongoing uncertainty about the impact on our economy of raised taxes on higher-income earners and of expected continued regulatory burdens, as well as the still-looming concerns about the federal deficit and debt ratings.

None of this should come as a shock to truckers, of course. The wonder is that many in business community are attempting to be optimistic about the situation, as I noted in an earlier post. Also, too, many analysts think such sluggish conditions may actually favor trucking in many respects.

Jumping back to the Vistage survey, the firm analyzed its findings to highlight four key business trends that will take shape in the early part of 2013:

  • Uncertainty Slows Economic Growth:Current economic conditions rebounded from the midyear lull, as twice as many firms reported recent gains as losses. Nonetheless, just 35% of firms at year-end reported improving conditions, down from 60% at the start of 2012. Overall, 30% expected a weaker economy in 2013 compared with 26% who expected stronger economic growth. The main issue hampering stronger growth is the political and economic uncertainty caused by the ongoing saga in Washington.
  • Cautious Hiring Plans: Planned payroll additions fell to 45% in the 4th quarter 2012, down from 49% in the 3rd quarter and 55% in last year's 4th quarter survey. Most of the shift has been toward keeping the number of employees unchanged as just 11% expected to reduce their staffs. While the proximate cause is an anticipated slowdown in revenue growth, uncertainty about federal tax and spending policies has been the central cause for lower growth prospects.
  • Investment Plans Weaken:Planned investments in new plant and equipment declined, with the percent that planned to reduce spending rising to 20% in the 4th quarter, up from 15% in the prior quarter and the highest level since mid 2009. Not only did 32% report cutting their spending due to the looming fiscal cliff, but 22% would cancel ongoing investments if no resolution was reached by the end of February.
  • Revenue and Profit Slowdown:Two-thirds of all firms anticipated revenue growth during the year ahead in the 4th quarter survey, although only slightly below the prior two quarters, it was down 10 percentage points from last year. Profits were anticipated to increase by 49% of all firms, down from 52% last quarter and 55% last year. Just 39% expected to increase the prices for their products or services. Managing costs and expanding the number of customers they serve were seen as the biggest challenge during the year ahead by 47% of all firms.

The above details are certainly not what anyone in the freight business really wants to hear right about now; then again, knowing the road will be bumpy before you reach it often helps one mitigate negative impacts. That’s the hope, at least. 

Discuss this Blog Entry 11

on Jan 10, 2013

"uncertainty about the impact on our economy of raised taxes on higher-income earners"

I guess I'm a member of high income earners and didn't even realize it. I'll bet if you take a poll, you'll find out that everybody's taxes went up. That is going to affect a growing economy more than uncertainty. If a family has no disposable income they spend less. Spending less will keep us in a recession. The "high income" earners will pass their tax bill along to the consumer in the form of higher prices...or their corporations will. That will just add to the malaise.

Your article on light truck growth is an example. You have to be counting only on corporate fleets, the average person cannot afford to shell out $25-$50k for a ride. The costs for their execs taxes will again be covered by a raise in the vehicles sale cost

on Sep 1, 2013

cipto junaedy
I have read all the comments and suggestions posted by the visitors for this article are very fine,We will wait for your next article soonly.Thanks!
Cari Uang Lewat Ekiosku.com

on Sep 11, 2013

This blog has lots of very helpful information on it! Thank you for helping me! Link Pyramid ,Buy SoundCloud Plays ,Buy Soundcloud Followers

on Sep 30, 2013

It is about bringing a group of professional Europeans to Non europeans countries members of Anna lindh to follow an integration program for 6 days to learn,
SEO ZEN software review
timeline poll wizard review
CPA Tycoon download

on Jul 17, 2013

I have known very important things over here
låna utan säkerhet

on Aug 4, 2013

A great website with interesting and unique material what else would you need.
Visit Kid Festuga

on Aug 4, 2013

Blog gave us useful information to work. You have done an amazing job!Discover Miss Lyrics

on Aug 7, 2013

Great blog you people have maintained there, I totally appreciate the work.
click this site

on Aug 8, 2013

If you child love milk, they have a super cool chance to grow up it’s healthy and help a great cause at the same time.organic pure green beans

on Aug 15, 2013

I kept this network, and I was impressed blogs! The last part is extremely detailed and concrete.help with lasting power of attorney

on Aug 16, 2013

Thank You very much for your really good web page. Have a good day.It's very useful for everyone for sure.youtube video

Please or Register to post comments.

What's Trucks at Work?

Trucks at Work: Sean Kilcarr comments on trends affecting the many different strata of the trucking industry.

Blog Archive

Sponsored Introduction Continue on to (or wait seconds) ×